Location Selection for New Business

This assignment focuses on the crucial process of selecting a suitable location for a new business venture. Students are tasked with identifying and evaluating key criteria for location selection based on various factors such as market demand, accessibility, competition, and operational costs. The assignment encourages the application of multi-criteria decision making techniques to analyze potential locations and ultimately recommend the most advantageous site for the business.

Analytical thinking
and decision-making

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1. Importance of decision making and the application of decision analysis..........................1
2. Defining decision problem of Greggs Plc that involve multiple objectives ......................4
3. Applying Simple Multi Attribute Rating Technique (SMART)........................................5
4. The advantages and limitations of SMART method .......................................................12
CONCLUSION .............................................................................................................................13
REFERENCES .............................................................................................................................14
Illustration Index
Illustration 1: Criteria of selection of the best location...................................................................8
2

INTRODUCTION
Decision-making is the process of choosing the best and effective course of action from
two-or more alternatives in order to achieve desired objective of organization. The process of
decision-making plays an important role for every organization as by making right decisions the
various issues of organization can be sorted out (Anderson, Camm and Cochran, 2015). The
information is analysed and knowledge is utilized by decision makers to resolve issues that are
based on decision.
Greggs plc is the largest bakery chain in UK (Greggs Plc, 2017). All bakery products
such as cakes, biscuits and pastries etc. are made by company. But various issues are faced by
the firm in making effective decisions. This report will conduct a critical review on the
importance of decision-making and application of decision analysis tools. The decision problem
is faced by company in order to search for a suitable office location. The analysis of decisions
involving multiple objectives, out of which, best option will be selected using SMART
technique. Further, the report will pay emphasizes upon both the strengths and weaknesses of
SMART tool.
1. Importance of decision making and the application of decision analysis
According to Craft, (2013), decision making defines the process of critical and anlytical
thinking so as to choose most suitable option out of a set of alternatives. In the firm, there are
different stages where decisions are taken by the management for continuous flow of work in the
right direction. At the time of making decision, manager should be careful because correct
decision leads to success while incorrect decisions may leads to failure. Further, in decision
making process in an organisation, it is important to make the decision considering its possible
impact on the organization and what benefit it will drive to the entity.
Through making an effective decision, it facilitates organisation to use all the available
resources effectively and efficiently in order to accomplish goals and objectives of business.. It is
1

necessary to make the right decision for all resources such as money, human, markets, machine,
etc. to achieve success. Through continuous practice of making decision, it has become easy for
an organisation to resolve day to day issues and challenges without facing any barrier. Moreover,
through making the fast and right decision, it helps a company in its growth and development.
Therefore within the organization, an effective decision can help in accomplishing the short and
long-term goal.

As stated by Fasolo and e Costa, (2014), at one point of time, every organization needs to
make different kind of decisions to achieve success. All the decisions are made in the best
interest of company.. From many alternatives that are available for company, process of
decision-making selects the best course of actions. According to Ford and Richardson, (2013),
the process of decision-making includes a number of activities such as planning, directing,
organizing, monitoring and controlling that are made by the top level management. The tactical
decisions such as work diversification of authority are done by middle level management in
organization.
As per wants of organization the processes of decision-making is performed at all levels
of management. It is essential as it brings uniformity and smoothness in the performance of
organization. On the basis of organization process and suitability, decision-making evaluates all
possible alternatives. In order to bring smoothness in operations and to achieve the goals of
organization, the selection of best course of action is significant. However, on the other hand, as
stated by Hjørland, (2015), large number of members is involved in taking decisions and so,
more time is consumed to make decisions effective. The judgement that are made individually
may consume a lot of time as the manager needs to examine the pros and cons of available
alternatives. The group decisions can also take a lot of time as it involves many meetings and
opinion from each member is taken which may result in delayed decisions or no judgement. As
per Velasquez and Hester (2013), in the current uncertain and highly turbulent environment,
decisions that are made by the managers can prove effective due to volatile conditions such as
political changes, changing human need and coming up of the advanced technologies. All these
are emergent changes that are unpredictable and cannot be forecasted. Henceforth, firms face
issues in coping up with such emergent changes as they have to take immediate decisions. For
instance, if a new technology is introduced in the market, then companies have to introduce
changes immediately otherwise, they will not be able to grab benefits of existed market
opportunities. However, at the same time, such decision need number of resources such as funds,
skilled & talented workers and infrastructural changes in the business as well which require
lengthy time. The best basis for making decisions is analysing the facts.

In order to assess the important aspects of a decision, analysis includes many procedures,
methods and tools. Many-times, people may have different perception, thoughts and judgements
and one decision may lead to arises conflicts among team members. The decision analysis
allows involvement of different stakeholders in the decision process and a shared perception of
the problems is developed. In order to make an effective decision, the analysis also provides
guidance on information that needs to be gathered (Rothman, 2017). The judgements are not
replaced by analytical thinking and decision analysis. They provide a structured and burst
framework to clarify decision-making and articulate them. Rather than imposing a complete
solution, the decision-analysis will develop insight understanding of decision problem. The many
procedures, methods and tools are used by decision analysis for identifying and clear represent
the important aspects of decisions. (Olausson and Nyhlén, 2017).
Application of decision-making tools:
In a wide variety of applications the decisions analysis can be used. Within decision
making the basic assumption is rationality. If the decision makers are ready to accept axioms
then the decision made by the analysis is preferred. An improved understanding of decision
problem can be developed with the decision analysis.
The decision of Petroleum exploration at Philips Petroleum Company
There is a high risk at petroleum exploration. To drilling opportunities, the scarce
resources are allocated. But no guarantee is given that significant quantity of oil will be
discovered. In the late 1980s and 1990s, along the eastern and southern western of United States
the Philips Petroleum company is involved in exploration of oils and gas. The two problems
faced by the manager of the company in deciding allocation of t annual exploration budget
between drilling project. Firstly, across project they wanted a consistent measure of risk. For
instance, they wanted to do comparison of project that offers the high chances of low returns
with those offer a low chance of high returns. However secondly, in joint drilling projects with
other companies they need to decide their level of participation (Rahim, 2017). For instance, the
strategy can be adopted by company that would a have a small involvement in a wide range of
projects. The investment opportunities were rank consistently by the managers with help of
decision trees and utility functions. The awareness of risk was increased due to use of these tools

and the manger gained insight knowledge of financial risks that is associated with investment
opportunities.
Prioritizing infrastructure renewal projects at MIT
The ground and building of MIT need to be maintained and renewed constantly but the
resources that are available to carry put this work are limited. So, systematic method is needed
by the department in order to prioritize projects such as maintenance of heating, air conditioning
and electrical system (Taylor and Love, 2014). The workshop has been conducted that involves
various members of renewal team. In this workshop, a value tree was used to recognize the
project assessment. The main goal was to reduce the impact on environment and to rescue impact
on public image of the institute. In order to assess the relative weights analytical hierarchy
process was used and to obtain score of consequences utility function were used. The overall
'performance index' was obtained for the projects by combining weights and scores. This helps in
prioritizing the projects. A number of benefits were achieved due to application of decision
analysis tools. A consistent and defensible rationale was provided for the prioritization
2. Defining decision problem of Greggs Plc that involve multiple objectives
Greggs Plc is one of the largest bakery chains in UK. Currently, it is searching for a new
location to expand its operations. However, there are seven possible choices (new offices) from
which, a suitable location can be hired on rental basis. . There are number of factors which
might affect the decision making process of selecting the best office location such as price, work
space, closeness to consumer, size and many others. The key requirement is that owner wants to
keep the price of this location office low as much as possible. The other factors that are related
with the location of the building such as the old building will not give an excellent working
environment of the staff and also the location that where the potential customers will be found
will be selected. The making trade-offs between these objectives is avoided by unaided decision-
making. For instance, a supplier might be rejected due to its high price however the suppliers
delivery time is fast and it offer excellent after-sales service. The various factors are examined by
the decision-maker in order to solve the problem. So in order to make a choice the decision-
making is forced to use simplified mental strategies (Velasquez and Hester, 2013).

In order to select the best office location, it requires analyzing multiple objectives
considering number of alternatives. Objectives that need to be fulfilled by considering the
problems are as follows:
 The cost that is related with the price of rent, bills of electricity, cleaning, etc. need to be
low. The cleaning and electricity bills of the office should be considered while selecting
the office location for company.
 The location that is selected need to be close to the customers and the office must be
situated at the place which is considered as a convenient place from consumer point of
view. An old and decay building can create a business loss and poor image. So, the
building needs to be new, attractive and well equipped also. The conditions of working
should be good for the employees. The building should have care parking facilities for
both employees and customers. The size of building should be large in order to provide
comfort to the employees.
3. Applying Simple Multi Attribute Rating Technique (SMART)
The SMART technique is based on the linear additive model. With the help of smart
technique the decision-maker can make effective decisions that involve multiple objectives. A
finite set of alternatives within a specific decision problem is analysed by the decision -makers
with the SMART method. All the complexities of the decision problems is not captured and
outlined by this method of decision analysis (Rothman, 2017). The important aspect and
attributes within the decision problems is highlighted by this method .The increased
understanding to the decision problems is provided by SMART method.
There are 8 steps that need to be followed for SMART method decision analysis and they are as
follows:
Step 1: Recognition of decision-makers
This step of SMART will recognize the decision-makers. It is an important aspect to
understand who are the participating parties .The decision-makers can be both individual or
group-based (Rahim, 2017).
Step 2: Recognition of optional course of action

In this within the decision problems the decision makers will recognize the optional
course of action. AS in the given problem, Greggs Plc has seven alternatives available from
which office location can be hired.
Step 3: The identification of attributes that are relevant with decision-problem
In this stage, attributes that are most relevant with respect to the decision-problem will be
identified by the decision-makers. Within the decision analysis these attributes are used to
measure the performance of the alternative course of action. For the given problem, rent, ease to
consumer, location, size and many others factors will be used for selecting the most preferable
location.
Step 4: The performance of alternative is measured relative to identified attributes
The performance of attributes will be evaluated during this stage. Referring the problem
case, rental charges, size, consumer’s location, parking facilities and other factors will be
compared for all the seven alternatives.
Step 5: The determination of weight of each attributes
In this stage, weights are assigned to each attribute. It will provide details about the
relative importance of all the factor and help in selecting the best location for establishing new
office premises.
Step 6: A weighted average of the value for each alternative is assigned to that alternative
The calculation of performance of each option overall is done in this step. It helps in
ranking different alternatives and assists in best selection.
Step 7: Making provisional decision
The provision decisions are made by decision-makers in this step, in which, supplier
whose terms and conditions are favourable and who met all the selection criteria will be chosen.
Step 8: Performing sensitivity analysis
In this step, the visual representation is made to examine robustness of different
alternative
Applying SMART method to the problem

The SMART method can be used in the Greggs plc so as to gain insight understanding of
the problem that involves multiple objectives (Mollicone, Pulliam and Lacson, 2013). The
problem that is faced by the company is to select office location for a building while fulfilling
multiple objectives.
Office Location
Yearly rent (GBP)
1. Kingdom Street 20000
2. Union Street 30000
3. Laganbank Square 15000
4. 10 Cornawall Street 10000
5. Abacus House 12000
6. Bothwell Street 5000
7. Wellington Street West 15000
The table shown above represents the 7 location of office and the yearly rent. From these
7 locations, company will select the best course of action from all alternatives that are available.
In this decision-makers are the owner of the company that will make decisions regarding the
office location.
 The step 1 and step 2 of the SMART technique have been completed as the decision
maker and the alternative course of action have been identified.
 In the next step the attributes will be determined in order to select a best location for its
business. The owner of the business will take into consideration two attributes that is
'price' and 'performance'.

Illustration 1: Criteria of selection of the best location
The above diagram represents a value tree for the location office problem. The owner
will consider all the above factors such as working environment, cost, etc. while selecting
building.
 In the next step, performance of option on each attribute is measured. The annual rent is
already known to the owner so the owner can estimate the bills cost and cleansing from
companies that provide these services.
Office Location Rent
annually(GBP
)
Cleansing
price
annually(GBP
)
Bills related to
electricity
annually(GBP
)
Total price(GBP)
1. Union Street 30000 2000 3000 35000
2.Kingdom Street 20000 800 2000 22800

3. Laganbank
Square
15000 2000 1000 11700
4. 10 Cornawall
Street
10000 1000 700 14100
5. Abacus House 12000 1100 1500 14600
6. Bothwell Street 5000 2300 2500 9800
7. Wellington Street
West
15000 900 1100 17000
The above table represents the association of cost with the seven offices
The identification of variables to present these attributes can make the work easier. The
size can presented by the area if floor in square feet. The potential customers can be found
through the distance of the office from the town centre. But to measure the performance of
attributes such as “image” and “pleasure” there is a need to use value functions and direct
mapping.
Direct Mapping
The “image” cannot be represented with quantifiable variables so the owner will give the
ranking in terms of the image that is most preferable to less preferable.
The ranking that are given by the owner are as follows-:
1. Union Street
2. Kingdom Street
3. Laganbank Square
4. Wellington Street West
5. Abacus House
6. 10 Cornawall Street
7. Bothwell Street

As per the owner Union Street has the best location for image. So the 100 value can be
given to Union Street and Bothwell Street will be given 0 value for image.
Value functions
Office
Attributes Weight
s
A B C D E F G
Close 30 95 30 70 70 60 0 100
Visible 24 65 70 80 30 40 70 60
Image 22 95 10 0 50 90 0 20
Size 8 75 30 10 30 70 80 50
Pleasure 4 0 100 0 90 60 0 50
Parking 2 90 30 100 55 100 0 80
90 420 270 260 325 420 150 360
Aggregate 72.8 35 43 46.3 57.4 23.2 56.4
The above table shows the value and weights for location office problem
Office Location Area of floor (ft)
1. Kingdom Street 900
2. Union Street 500
3. Laganbank Square 400
4. 10 Cornawall Street 700

5. Abacus House 1400
6. Bothwell Street 400
7. Wellington Street West 550
The working condition can be improved due to increase in floor are from 500 to 900 ft.
For the owner the large office is more attractive so on the scale of 100 the owner will give 100
value to Abacus House and the smallest size that is both-wall Street is given 0 value. So the most
preferred size for the owner is 1500 and the last preferred size is 400.The similar method can be
used for “customer closeness”. By making use of variable distance from the centre of town,
value function can be determined (Rahnev, Larson and D’Esposito, 2016).
 In the next step the weight is assigned to each attribute.
Here only 2 attributes will be taken that is size and customer closeness.
Let F and G be 2 location of offices
Location of office Area of floor Customer distance
F 100 0
G 0 100
Weight 5 1
The aggregate value for location of office F= (5*100) + (1*0) =500
The aggregate value for location of office G= (5*0) + (1*100) =100
As per this table, decision-maker will select the F location for its office as the floor size is
considered as the best attribute. But there is problem that is faced by weights as they do not
consider the most and least option on each attributes. Thus, by making use of swing weights, this
problem can be solved. With the swing weights, the owner is given chance to categorize
attributes into most and least preferred (The Simple Multi Attribute Rating Technique, 2014). So,

on the basis of location of building, owner has categorized attributes and provided weight-age to
them accordingly.
Attribute Weight Normalized value
Customer closeness 100 31
Image 80 25
Visible 70 22
Size 40 13
Pleasure 20 6
Parking facilities 10 3
Total 320 100
Thus, by summing up lower -level weights, the weights of upper-level attribute of value
tree can be found. So, weight turnover is 78 (31+25+22) and weight for work condition is 22
(13+6+3).
 In the next step, overall performance of each office location is found by aggregating
value scores. In order to do this, additive model is used (Govindan, 2015).
For Union Street, calculations for additive model are done as:
Attributes Union Street values Weight Value*Weight
Customer Closeness 95 30 2850
Image 65 24 1560
Visible 95 22 2090
Size 75 8 600
Pleasure 0 4 0
Parking facilities 90 2 180

Total 7280
The summarized product is then divided by 100. So, the aggregate value for United Street
is 72.8. Thus, it can be clearly seen that the highest benefits are obtained from Union street.
 In the last step, sensitive analysis is done in order to evaluate robustness of alternatives. If
there is any change in the weight, the effects of changing weight at that time can be
investigated by decision-maker through this analysis.
Thus, by analysing each and every location for office, it can be concluded that Grggs plc
will select Union Street for the office as it will be the best choice for business owner.
4. The advantages and limitations of SMART method
The advantages of SMART method are as follows-: It is relatively easy to apply without practice- SMART technique is easier to use in
comparison with Even Swaps. Much practice is not required for applying the concept of
SMART.
 The output process provides more information- The output process provides more
information in comparison with even swaps. In SMART a list of options and its
associated scores have been given. And also with the help of sensitivity analysis the
robustness of the recommended choice can be made (Vohs and Tice, 2014). The limitation of this techniques are as follows-: The need to assign scores – One of the requirements of SMART technique is to assign
scores from 0-100 scale. This process takes a lot of time. It is a time-consuming process
to assign each score to every attribute.
 The need to determine swing weights – There is often a difficulty faced to understand the
true meaning of swing weights. Due to this, wrong swing weights are applied which may
produce wrong decisions in the organization.
CONCLUSION
By summing up the above report, it can be concluded that decision making plays an
essential role in organization. It assists the organization to make efficient decisions and to

achieve desired goals of business. It has been assessed that Gregg plc is facing problem
regarding the selection of location of office that involves multiple objectives. SMART technique
is used by company to make decisions regarding the office location by considering various
factors such as cost, visibility, image, parking facility and customer closeness.

REFERENCES
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and fluency: Expressing value judgments in numbers or words. Omega. 44. pp.83-90.
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